Finnair Considering Asia Contract-Cabin Crew

BRUSSELS—Evidently taking a page from Norwegian Air Shuttle’s practice of hiring and domiciling cabin crews at operating bases outside Europe, Helsinki-based Finnair intends to contract cabin crew for flights between Asia and Finland from a company based in Asia if cabin crew’s employee consultation negotiations fail to deliver €18 million in savings.
Management and the Finnish Flight Attendants’ Association (SLSY) agreed at the end of last year to negotiate €18 million in cost reductions, but talks ended Monday without an outcome.
The airline warned last month, when it reported another year of losses, that it would look at “alternative operating models” if no agreement with cabin crew would be reached. Finnair already outsources the cabin crew on its routes Barcelona and Madrid routes completely. It also makes use of sub-contracted cabin attendants on its Helsinki—New York JFK service, with part of the cabin crew from Finnair and the other part employed by Adecco USA.
Finnair also outsources part of its short-haul network to Flybe Finland, a joint venture between Finnair and UK’s Flybe.
Finnair’s CEO Pekka Vauramo says the carrier had offered the SLSY members protection against further outsourcing schemes for the next two years, but “unfortunately our and SLSY’s views on the magnitude of the savings and how they should be implemented were too far from each other.”
The SLSY union was only willing to consent to €7.5 million in savings, less than half of management’s target, of which only €2.7 million would have materialized during the current collective labor agreement period.
Vauramo, who joined Finnair last year, has been very clear about the airline’s cost structure, especially the personnel cost base, which he feels has “destroyed” Finnair’s profitability. Finnair has no employment or growth prospects since the present-day wage level is not equivalent to the market level, he asserts, and “achieving the targeted savings is of paramount importance in safeguarding the future of Finnair and restoring its profitability.”
In the initial stage, Finnair plans to outsource the cabin personnel of three long-haul routes at maximum during this year. In the next stage, it would further outsource more than 10 routes, both short-haul and long-haul. The planned outsourcing would result in the reduction of approximately 540 cabin attendants in the coming years. Finnair has in total 1,500 cabin attendants in Finland.
Finnair is looking to outsource the cabin crew services to a company based in Asia, a spokeswoman confirms to Aviation Week. Most of its long-haul flights are to Asia and basing crews there makes more sense economically.
More details on the outsourcing plan will be released “in mid-May at the earliest” when the employee consultation process is finished, she says, noting that further outsourcing still could be avoided if cabin attendants approve the €18 million in savings.
The employee consultation process is mandated by Finnish law when a company contemplates lay-offs. This process ends in mid-May.
Separate from the employee consultation process, Finnair is examining whether to set up a subsidiary to supply cabin services and sell them to the group.
Finnair also wants savings from other employee groups as part of its drive to reduce annual costs permanently by €200 million (compared with 2010 levels) by the end of 2014.
Negotiations with the Finnish Air Line Pilots’ Association (SLL) and Finnair’s white-collar employees and engineers (FYT and FIRY) still continue. Deadlines for these negotiations are in June. The targeted annual savings in SLL’s negotiations total €17 million.